Carphone getting the right numbers

CARPHONE Warehouse, which was widely dismissed as one of the more transitory products of the dotcom mania, is in fact turning into one of its finds. It has weighed in with a quite remarkable trading update given what has happened to the mobile phones market over the past 12 months. Founder and chief executive Charles Dunstone has confounded those who were ready to write him off.

What sets this businesss apart from other phone outlets and other retailers is the contractual relationship it maintains with many of its customers. This means Carphone gets a payment from the mobile operator as long as the customer continues to use the phone and therefore has an interest in providing good after-sales service.

It keeps its customers on this basis for eight to 10 years and 85% of them come back to buy their next phone. One-off sales are important, of course but less so. Indeed, the business is evolving so fast with the provision of things like billing services for operators that next year half its revenues will be recurring. No other retailer has that quality of business.

Sales of handsets are down but nothing like as much as figures from manufacturers led us to expect and the damage to revenues overall is slight, margins have improved and like-for-like volumes are healthy. Other chains seem to have been hit much harder.

Nokia said last autumn it expected the number of retail outlets Europewide to drop from 130,000 to 80,000 and that seems to be under way. In bad times market leaders do well and Carphone has added significantly to its market share, claiming 20% at Christmas and 24% now against only 12% a year ago.

Today's results are not enough to deliver the heady £85m profit for the year analysts initially thought possible, but they may well conclude that £72m to £76m is most probable.

Winsor war

THE trio whose task it is to save Britain's railways were meeting today on a platform at the Queen Elizabeth Centre - a conference venue not a station. Transport Secretary Stephen Byers, Strategic Rail Authority boss Richard Bowker and rail regulator Tom Winsor were delivering their vision for the railways.

Winsor has been largely invisible since he stuck the knife into Byers before a Select Committee of MPs but remarks attributed to him this week suggest he could make life very difficult because he plans to be as tough on the accountants now running Railtrack as he was on its previous management.

The fact that the rail network is in administration does not give it immunity from persecution by the regulator. This means, theoretically at least, that Winsor could soon start levying fines for lateness or failure to hit targets and be as nasty to the administrators as he was to Railtrack management.

This has reportedly come as a shock to the administrators, who had half assumed Winsor would make their life easier by slipping through an 'interim review' easing the more-onerous targets and penalties imposed on the network. But Winsor is telling friends he is not going to do anyone any favours.

Given that the network is fast crumbling under the accountants' untutored hands and delays are mounting at an alarming rate, there is much for Winsor to get his teeth into.

The prospects for farce now loom large. When the hapless accountants are fined buckets of money by the regulator, they will no doubt pass the charge on to Byers. It will be an interesting test to see if he is more willing to waste tax payers' money on these fines than he is to use it to bail out Railtrack shareholders - many of whom are the company's employees who had invested in its shares.